SMIC Rallies as Baidu Slips After Market: China Overnight

Chinese stocks climbed to a one-month high in New York as companies from PetroChina Co. to Semiconductor Manufacturing International Corp. posted better-than-expected results.

The Bloomberg China-US Equity Index of the most-traded Chinese equities in the U.S. rose 1.7 percent to 92.46, the highest close since March 27. Oil producer PetroChina gained 2.1 percent, while Semiconductor, known as SMIC, added 4.8 percent. Baidu Inc., owner of China’s most-used search engine, tumbled in after-hours trading as first-quarter adjusted net income fell short of analysts’ estimates. The stock surged to an eight-week high during normal trading hours.

Of the 12 companies on the Bloomberg gauge that have reported quarterly earnings, six stocks, including PetroChina and SMIC, posted revenue that beat analysts’ projections, data compiled by Bloomberg show. The index trades at 13.8 times forward earnings, compared with 14.4 for the Standard & Poor’s 500 Index, after its valuation fell below that for the biggest U.S. stocks last month for the first time since 2008.

“We are finding more opportunities as companies are showing attractive valuations,” Michael Reynal, who helps manage about $1 billion in emerging-market assets including Baidu shares at RS Investment Management Co., said by phone from Des Moines, Iowa. “We prefer companies linked to consumption stories where there’s visibility in earnings and growth.”

Baidu Slips

The iShares FTSE China 25 Index Fund, the largest Chinese exchange-traded fund in the U.S., climbed 1.6 percent to $37.05, a one-month high. The S&P 500 gained 0.4 percent to 1,585.16 as earnings from United Parcel Services Inc. to Cliffs Natural Resources Inc. exceeded estimates and after U.S. jobless claims fell.

The Shanghai Composite Index of domestic Chinese shares fell 0.9 percent to 2199.31 yesterday. The Hang Seng China Enterprises Index in Hong Kong rose 1.3 percent to 10,772.76, advancing for a second day.

American depositary receipts of Baidu sank 7.4 percent to $85.50 by 4:44 p.m. in New York, after jumping 4.8 percent to $92.34 during normal trading hours. Net income for the Beijing-based company rose to 2.04 billion yuan ($331 million) in the first quarter, from 1.9 billion a year earlier, below the 2.19 billion-yuan average of eight analysts’ estimates compiled by Bloomberg.

Baidu, which is seeking to compete with Youku Tudou Inc. in the Internet video business, will pay as much as $400 million to acquire Chinese online video operator PPS, China Business News reported yesterday, citing people it didn’t identify. Baidu declined to comment in an e-mailed statement, according to the report.

ADRs of Baidu have lost 7.9 percent in New York this year.

‘Strong Growth’

“We like Baidu, which has strong growth in a large market,” RS Investment’s Reynal said before the earnings results were released. “We expect them to do well.”

ADRs of PetroChina climbed to $126.84 in New York, the highest price since April 12. The Beijing-based oil and gas producer posted net income of 36 billion yuan ($5.84 billion) in the three months ended March 31, beating the average of six analysts’ estimates for 34.3 billion yuan.

China Petroleum & Chemical Corp., Asia’s biggest refiner, rose 0.2 percent to $108.80. The company, known as Sinopec, said net income rose 25 percent to 16.7 billion yuan in the first quarter, trailing the 18.9 billion-yuan average of six analysts’ estimates compiled by Bloomberg.

Morgan Stanley analysts led by Andy Meng recommended that their clients accumulate Sinopec shares in the second quarter should the stock fall because lower oil prices will prompt regulators to deregulate fuel prices.

China Unicom

China Unicom (Hong Kong) Ltd., the nation’s second-largest wireless company, added 2.1 percent to $14.19 in U.S. trading, the highest level since March 11.

The company, based in Hong Kong, said yesterday that sales increased 15 percent to 70.6 billion yuan in the first quarter, compared with a median analyst estimate of 66.2 billion yuan. Net income in the first quarter rose 89 percent to 1.9 billion yuan, falling short of a 2.58 billion-yuan median analyst projection compiled by Bloomberg.

SMIC, a computer chip foundry, climbed to $3.46, the highest since July 2011. The shares were raised to hold from underperform by Daiwa Securities Ltd. a day after the Shanghai-based company reported first-quarter net income four times the average four analysts’ estimates. Sales beat analysts’ forecasts by about 5 percent.

Short Interest

China Life Insurance Co., the nation’s biggest insurer, advanced 3 percent to a one-month high of $40.92 in New York. The company posted a 79 percent jump in profit in the first quarter as investment returns increased and impairment losses fell.

Yanzhou Coal Mining Co., China’s fourth-largest producer of the fuel, gained 1.9 percent to $11.50. The company said yesterday that net income fell 77 percent in the first quarter to 480.6 million yuan.

Vipshop Holdings Ltd., an online fashion retailer, fell 2.1 percent to $29.24 in New York, down 7 percent from a record high of $31.48 reached April 5. Short interest in the stock more than doubled to 1.38 million shares as of April 15, from March 28, the 10th-largest percentage increase among stocks traded on the New York Stock Exchange, data complied by Bloomberg show.

Before it's here, it's on the Bloomberg Terminal.